Four states that shifted to defined contribution from defined benefit plans did not save money, said new and updated case studies from the National Institute on Retirement Security. NIRS researchers updated prior case studies on Alaska, Michigan and West Virginia and created a new study on Kentucky. All of the states have switched new employees to defined contribution-only accounts to deal with pension underfunding and rising costs. According to an NIRS report on the studies, the changes increased overall [...]

When benefits adviser Ted Benna thought up a new type of employee savings plan in 1980, the client he created it for rejected the idea as too risky. After all, no one had previously used the unremarkable section of the tax code called 401(k) to defer paying taxes on money that rank-and-file workers set aside for retirement. So Benna decided to try it out at his own workplace, Johnson Cos., a small consulting firm outside Philadelphia. Without intending to, [...]

House Republicans are considering a plan to sharply reduce the amount of income American workers can save in tax-deferred retirement accounts as part of a broad effort to rewrite the tax code, according to lobbyists, tax consultants and congressional Democrats. It is unclear if Republicans will ultimately include a cap on contributions in the tax bill that they are expected to release in the coming weeks. Such a move would almost certainly prompt a vocal backlash from middle-class workers [...]

For nearly 40 years now, we’ve been hearing that 401(k) plans are the key to a comfortable retirement. By giving a tax break to workers contributing part of their paychecks to their retirement nest eggs, the plans were designed to supplement Social Security benefits and employer pensions. Instead, they’ve become substitutes, not supplements, for employer pensions and bulwarks against continuous attacks on Social Security benefits. A new survey from Boston College’s Center for Retirement Research demonstrates, however, that 401(k) plans are [...]

We’ve been at this for almost 3 years — the DOL Fiduciary Rule. The Rule’s intent was to increase transparency in fees paid by consumers, decrease conflicts of interest caused by variable compensation and to put all investment advice under a uniform standard of care. Sadly, the department places the most cumbersome and difficult requirements on IRAs and independent investment and insurance advisors. […]

Most of the positive PR about 401(k) plans is warranted: They’re convenient, as contributions are deducted directly from the worker’s paycheck. They enable savers to shield a substantial amount of money from taxation ($18,000 a year; or $24,000 if you’re 50 or older), and if an employer matches a portion of employee savings, it’s an easy way to score free money. But don’t believe everything you hear. Falsehoods — and even following fact-checked 401(k) rules of thumb in every [...]

After being trapped in an inferior 401(k)-style retirement plan, is it possible for a union to reverse the trend and switch back to a traditional defined-benefit pension? Connecticut state employees did just that in 2012. Our little-known story, combined with similar victories in Massachusetts and West Virginia, shows it can be done. There’s a small but growing movement to follow suit in other states. […]

Struggling under the weight of pension and health care obligations, Michigan lawmakers appear ready to take another whack at public employee benefits — a move that reflects renewed determination to shift workers to 401(k)-style retirement systems, even if it happens in baby steps. Other states have made more modest changes, but the latest push shows that conservatives want to approve big reforms 20 years after Michigan became the first state to close pensions to future state workers. Republican Gov. [...]

Herbert Whitehouse was one of the first in the U.S. to suggest workers use a 401(k). His hope in 1981 was that the retirement-savings plan would supplement a company pension that guaranteed payouts for life. Thirty-five years later, the former Johnson & Johnson human-resources executive has misgivings about what he helped start. What Mr. Whitehouse and other proponents didn’t anticipate was that the tax-deferred savings tool would largely replace pensions as big employers looked for ways to cut expenses. Just 13% [...]

Are you keeping a close eye on your 401(k) and other retirement plans? You should, because employers and plan managers make mistakes—and that can lead to big headaches and out-of-pocket costs for you. Just ask Benjamin Levy, a retired information-technology professional whose former employer erroneously deposited in his 401(k) a portion of a bonus that he received after he retired. The company overlooked its own plan’s rules prohibiting retirees from making contributions. Meanwhile, Mr. Levy already had rolled that [...]

Servicemarks

Lifetime Income Security Account (LISA) is a service mark of CORPaTH. Guaranteed Lifetime Income Account (GLIA) is a servicemark of CORPaTH. CORPaTH is a SAGE Solution: Sustainability Advocacy Governance and Education. CORPaTH is a Joint Labor Management Initiative.